VNet peering and VNet-to-VNet both offer ways to connect VNets together. But based on your specific scenario and needs, you might want to pick one over the other:

• VNet peering: This offers high-bandwidth, low-latency connections, which are useful in cross-region data replication and database failover scenarios. The traffic remains on the Microsoft backbone and is completely private; that's why customers with strict data security requirements prefer to use VNet peering, as public internet is not involved. There are also no extra hops because no gateway is used here, which ensures low-latency connections. You can keep up to 500 VNets with one VNet. The ingress and egress are charged using VNet peering. In region/cross-region scenarios, VNet peering is recommended.
• VPN gateways: These provide a limited bandwidth connection and are useful in scenarios where encryption is needed, but bandwidth restrictions are tolerable. The bandwidth limitations vary based on the type of gateway, from 100 MBps to 1.25 GBps. In these scenarios, customers are also not as latency-sensitive. Each VNet can only have one VPN gateway, and the gateway and egress are charged. There is a public IP address involved, which is bound to the gateway.

In this section, we've covered the scenarios in which VNet peering and VPN gateways are most suitable. This concludes this chapter.